A Product Market Fit Show | Startup Podcast for Founders
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A Product Market Fit Show | Startup Podcast for Founders
COVID nearly bankrupted him. Then with AI he grew from $0 to $25M ARR in 4 years. | Andrew Lockhead, Founder of Stay22
He was selling to events like CES, SXSW, etc. Revenue dropped from $160K/month to under $10K... overnight. Investors from his seed round refuse to wire funds.
After nearly going bankrupt, he finds a way to pivot. A year later, his business takes off.
2021 - $1M
2022 - $5M
2023 - $15M
Now - $24M.
- Learn how to deal with massive swings in revenue and unpredicted events. Early-stage founders are always one deal, one employee, one fundraise away from success... or failure.
- Learn why you "can never celebrate until the money is in the bank"
Timestamps:
(00:00:00) Intro
(00:01:16) The Start of Stay22
(00:07:15) The Seed Round
(00:11:53) Pivoting the go to Market
(00:19:38) Investors Pulling out Due to Covid
(00:26:56) Finding the Opportunity in the Pandemic
(00:31:31) Tapping into the Blogger Market
(00:37:31) Growing Back from Zero
(00:38:49) Finding True Product Market Fit
(00:39:35) One Piece of Advice
Some people, we had told them you know what? We'll pay you $5,000 up front, and we're going to recoup that money. As soon as you generate revenue, I'll send you money.
Pablo:You paid them to become customers.
Andrew:We offered them. As soon as you offer, you know what? If it's still not enough, I'll pay you 5,000.
Pablo:Wow.
Andrew:After a couple of months, you will generate enough revenues. I'm going to recoup that money and pay you back.
Pablo:Welcome to The Product Market Fit Show, brought to you by Mistrial, a seed stage firm based in Canada. I'm Pablo, I'm a founder turned VC. My goal is to help early-stage founders like you find product-market fit. Andrew, welcome to the show.
Andrew:Hey, Pablo, it's a pleasure.
Pablo:You're running a company now called Stay22. I remember when you raised your seed round. I saw it late, and I was like, oh, this idea sounds really compelling. Then I saw you grow, and I think you got to about two million in Topline, doing really well. Then Covid happened, and it was like – you're in the travel industry. We’ll get into exactly what you do but went from two million to near zero overnight, and now you've built it back up. Not the two million a year but the two million a month. That's incredible journey, so we'll dive into that. Maybe, Andrew, tell us a little bit what is Stay22 and just a bit about the origin story, like how you started in the first place?
Andrew:Of course. It first started with my previous company. I had a ticketing platform back in the days that I sold, and I was looking for a new challenge. My co-founder was coming from the travel world. He was trying to go through a B2C route, which I hate. I'm a B2B fan from heart, and I told him there's a better way to do what you're doing right now to reach more people. Let's use ticketing platform events to reach out those user, and this is how Stay22 was formed. We were working with events like South by Southwest, CES, Startup Montreal, C2 to just empower their guests to find destination accommodation and restaurants near their next event, and this is how the story started for us about seven years ago.
Pablo:What was your co-founder doing before? What was his B2C idea?
Andrew:It was also in travel, something similar to TripIt so kind of a metasearch but for short-term rentals, kind of like Airbnb merged with Vrbo and [ unclear] and all of those short-term rentals.
Pablo:What you shifted to was like – if I understand correctly, it's like somebody's doing a big event, and then on their own website they embed your platform so that people can find accommodations near the event easily?
Andrew:Exactly. This was one of our first idea. We came up with an API for them to embed on their website or ticketing platform, which was a big mistake. No one wanted to integrate API. It’s too complex, take too much time, and the sales cycle was really low because of that. We came up with a new solution called a map-based solution. Now that was taking five minutes, the embedded live frame on their website, and they were able to just show where their events was taking place, all the live abilities with prices for destination nearby from Airbnb, Vrbo, Hotel, Booking.com, Expedia, and so on.
Pablo:What's the rev share model? How do they win? How do you win?
Andrew:It depends. With that first customer base we started with, we were more of a painkiller for them, so that was great. They didn't need any type of rev share. They're just like you know what? You're solving a problem for me. I can focus on my events. I don't have to worry about finding accommodation for my guests. You keep everything, and I'm happy with this.
Pablo:What did they do before? What was a pain point for them?
Andrew:It was such a bad experience. They need to reach out to hotels. They need to negotiate deals after this. They need to fill the block. If they don't fill it, they're going to be on the payroll, so they have to pay for whatever room people don't fill out. It's just such a pain for them. They don't want to waste time on this. It's not adding value for the event, so they just decide to use solution like yourself.
Pablo:Tell me a little bit more about the starting of that. Once you partner up with your co-founder, you decide to go B2B. Do you just start building right away? Do you raise money? Do you talk to customers? You done it before. You weren't starting from square one either.
Andrew:My previous business was bootstrap. For this one, I'm like you know what? I was 28 at that time. I'm like I want to go for the VC path. I want to go fast. I want to break things. I want to see what it's like, so we decided to jump into the journey and jump into another incubator in Denver, Colorado. Me and him barely knew each other for a couple of weeks where we're building stuff in a basement, and we decided to move to Denver, Colorado for four months.
Pablo:Actually, maybe just before – how did you meet him then? Why did you start working with him?
Andrew:Startupfest. Startupfest in Montreal is a big event made for entrepreneur people that want to gather around, test idea, shares. There was pitching contests as well, so that was a great place for just meet fellow-minded entrepreneur.
Pablo:Okay. You met him, and you liked the idea so much that you're like, yeah, yeah, let's do this together?
Andrew:Yeah. My previous company was in ticketing. I'm like, “I know what you're trying to do in B2C. It's never going to work out.” He’s like, “Don't worry about it. Build it and it will come.” I'm like this is the boldest idea ever. What we're going to do is we're going to create a good go-to market strategy, find a way to have people to distribute to inventory, and it's going to be so much easy. That is exactly what I did in my previous business, so I knew for a fact it was going to work.
Pablo:What was the previous business?
Andrew:Ticketing platform for students. I was not the one selling those tickets. I was selling the platform for students union. They were the one doing the marketing, the promotion, handling the registration, payment, everything, and I was the one cashing in the money every time there was a transaction made.
Pablo:Like an Eventbrite?
Andrew:I knew exactly the go – yeah, like an Eventbrite.
Pablo:You knew this new play, like that go-to market, and so you just jump on.
Andrew:Exactly. I can pick up the call phone, call my previous competitor and tell him, hey guys, I'm not into the ticket anymore, but I got a great way for you to enhance your user experience, generate revenue out of it, and get more data. Are you in? Obviously, the answer was much easier.
Pablo:Who would've been your competitors back then?
Andrew:Back then it was exactly the Eventbrite, the in Quebec. There were so many companies outside in Canada as well in United States that was doing students ticketing platform, so I could just reach out to all those general admission and so on.
Pablo:How do they fit into this, like the short-term rental space?
Andrew:They all have the same problem, right? They have user that want to attend events, but if they live more than 100 miles away, they don't know for a fact if they're going to go. It’s going to be complex. We tell them, after a transaction take place or before, show them all of the accommodation nearby. Maybe they'll see that the accommodation is only the $100 a pop instead of, whatever, 500 they might be expecting. That's going to be dropping down the cost of travel for them, and they're going to be more inclined to book a ticket.
Pablo:I see. There was two sets of customers, if I'm understanding. There's the events themselves, like South by Southwest. They put it on the website, but there's also Eventbrite or whoever else is managing the ticket sales. They want to sell tickets, and this is almost a way to lower friction.
Andrew:Yeah, you got it right. We started with event at first because we needed to get a go-to market and see if it works working for them. As soon as we saw it was working, we're like cool, but one event a year is not going to work out because you had to wait another 365 days before the next edition. Let's go for the bigger one. Ticketing platform, we're having tens of thousands of event per week. They were the one doing most of the distributions for us at that point.
Pablo:Was the pitch like, hey, you can make more money, or was the pitch just you can sell more tickets because this is why people don’t…
Andrew:Sell more tickets and then as a user experience for them, get more data. This was a pitch. Money for them is – it was not a big deal. It's a small amount of money, so for them, it was a little bit more about the experience of the user.
Pablo:Okay. Back to the story. I mean, you move to Denver for an incubator, a first-time founder. You do the accelerator. You do the incubator because you need the network. You don’t know what you're doing, whatever. In your case, you'd been through before. It was bootstrap, not venture backed. Still, so what made you decide to even go to an incubator in the first place?
Andrew:I knew nothing about travel, nothing. I hate traveling. I didn't travel a lot because I was an entrepreneur, so as you know, we were living on Ramen. It's not like you can go travel the world, and I decided that it was the best way for me to just step up my game and get into that world. Think about the demo day. Think about the investor, Mendez, where they just match people together. All of this was unknown for me, so that was a great way to just get my step into it and make sure Stay22 was going to get good right off the ground.
Pablo:What incubator was it?
Andrew:It was called Travelport.
Pablo:Oh, so it was specifically focused on travel. That was one of the reasons he did it.
Andrew:Exactly. Then, as soon as we finished out of this, we came back in Montreal. I graduated from there, and we decided to apply for FounderFuel. Lucky for us, we got accepted, so we got our first check as well.
Pablo:Which is another kind of accelerator but in Montreal, right?
Andrew:Exactly. It was one of the largest one in Canada up to a couple of years ago. Now, once more, demo day, we're raising our first seed round, about three-quarter of a million dollars, and we just decide to launch our companies out there and just scale it from there from a small team of two people to eight.
Pablo:What did you have? You're raising 750K. What stage was the product or even revenue at back then?
Andrew:Back then, we were at a perfect product-market fit with the event industry, so we were reaching out events back-to-back-to-back. We’re scaling as crazy. A matter of 12 weeks of program, we had 7 partners, and by the end, we almost had 100 events working with us. Investors were super happy. They wanted to [unclear] the check. As soon as we got the money in, this is where we told them, “By the way, guys, we're not going to work with events anymore. It's not enough. We're going to work with ticketing platform.” “Whatever. We trust you guys, so do whatever you think is going to be the best.” We just decided to switch your company to work with ticketing because of the scale of it. Though it's a longer sales process, it's not exactly the same product. We had to redo the full process, and this is where we figured out that we were not a painkiller anymore. We started to be a vitamin. As I mentioned, it was not that much revenue for them. Yes, it was an in the user, but it was not that making of a pain point. They were more reluctant to the integration. It was taking more time, but it still was growing pretty fast. We were doing about 4X year over a year for the first couple of years, which was grade back in the days.
Pablo:Maybe just what numbers did you have? Do you remember? Was it maybe a 100K or so in revenue when you raised your seed round?
Andrew:Yeah. When we raised, we were doing about $250,000, I believe, and after this – in total sales, and after this, we did a million dollars.
Pablo:A year?
Andrew:Give or take about one quarter, yeah.
Pablo:This is a year. Okay, cool. Tell me a little bit more about that, this painkiller versus vitamin. I mean, it's a classic dichotomy. What was it that in one case – I kind of get it, but I mean, if you could just expand on that. What is it that makes something a painkiller must-have, which is what everybody's looking for? Every founder wants to be selling a must-have versus a vitamin which still has ROI. It still delivers value, but it just doesn't have the pull that you need it to have because it's like, yeah, sure, call me tomorrow, not top priority.
Andrew:Yeah, ring me back. We always make that joke about call me back in Q5. It's never happening.
Pablo:That's right.
Andrew:It’s part of a Google map. [ Unclear ] are like, sure, the risk is low, but the impact is low as well, so we'll see later. [U nclear] , Pablo, when we got into the incubator, for us, we came to the conclusion that we're a B2B2C, and we still need to have a great product for the end user. Otherwise, no one will be interested, and they forced us, actually, to do interview. We had to go into Starbucks and McDonald's, to hit up random strangers on the street and say, “Hey, by the way, you have five minutes? I just want to ask a couple of questions.”
Pablo:Oh, no way.
Andrew:That was so strange at first, bothering someone with – that were in the queue for a coffee, pitching them your startup, and saying, if you have a solution to help you find your next accommodation for an event, will you use it, what it should look like. Tell me more about the pain it will solve, how much it'll cost, running the full thing, but getting there was exactly where we needed. This is where we said we’re adding value. They were, oh, them. If there was such a thing I would love to be able. After this, we came to the conclusion that it was harder for us to reach them by B2C, and this is why we needed to get that strategy in there so like that B2B2C. This was one of our first learning we did in term of product-market fit.
Pablo:Was that useful? I mean, that sounds so – obviously, talking to customers is critical, right? In a B2B context, it's a little bit more meaningful because you can target the right ICP and actually be like, hey, how much would you pay for this, like very pointed questions? In your case, you're going up to strangers. You don't know. Do they even go to events? Do they not go to events? Are they just telling you what you want to hear? How do you manage to actually get some value out of that?
Andrew:I think most of the time they're just going to spitball. They will give you 90% of shit that you won't be using. Let's be honest about it. The mindset of talking with 12, 20, 50 people in the end to start to develop something, you understand, oh, there's something in there that maybe people are telling, maybe people are not telling about. For us, it was always about, if you had to find accommodation for your next South by Southwest and so on, where do you start to research? Do you go on Google? For us, we always came to the conclusion that they're always going to end on the direct brand, Booking.com, Airbnb, Expedia, wherever they have more loyalty point, so for us to create such a strong brand that we will be able to attract customer to us where they will search for the event was almost impossible. We're like, if we want to keep in that field, either we're going to do Reddit promoted posts. We'll have to find a good B2C ad together or spend millions of dollars on advertising, or we go and find a different strategy to get to those user. I guess this was one of our first learning.
Pablo:That really validated that you needed distribution. You needed to be at the right place at the right time, and that meant these partnerships. Realize, okay, events are great because you solve a clear pain point, which was – for them was, if you just think about the priorities, you're running a conference. You have so many things to do, and you have this nuisance which is people need to travel here, and they need to stay somewhere. If I don't solve the problem, they won't come to the event, but if I do solve the problem, it's spent – it's time. It’s not just time. It’s money. It's all these risks that you just get no value out of. Okay, I get that. Problem is it's once a year. Now you go to ticketing, and you're like, hey, this should probably help you sell more tickets. They're like, yeah, maybe it will, maybe it won't. I don't really know. I've got other things. What do you do?
Andrew:Exactly. First off the bat, we came – we did an ad back in the days with [unclear]. We're working with the biggest brand, with the biggest event. We're also using the event to give us warm introduction to those ticketing platform. If I was working with South by Southwest, I'm like, “By the way, your ticketing provider right now is not using you. That will be a great way to help enhance the user experience and drive more bookings.” He’s like, “Cool, let me introduce you.” Once you get those one, two, three, four, five introduction by their own customer, now they're like, “Okay, everyone's bothering me about it. Might as well integrate it.” We use a bottom-up acquisition channel to just say, you know what? Once we have enough outreach by those customer, they're going to be open to hear about your product and strategy there.
Pablo:Thats’s surprising. It’s surprising because it wasn't the product that you changed. It wasn't even maybe the messaging. It was, actually, literally the go-to market, the distribution, the how you get into the door. Is that because once they gave you the time they realized that there actually was a lot more value than they might've otherwise perceived, or maybe when they launched the product, is that when they really saw, holy shit, this actually moves the needle for us?
Andrew:Some people told us. They pitched an idea a couple of times. They’re like I've worked with companies similar to yours. It went down. I've lost everything. It's not worth the time to integrate and so on. One of our first partners, NIGHTOUT, we had to send over a letter of our board to say, by the way, we're a legit company. We're not going down. Here's the financial.
Pablo:Wow.
Andrew:Some people, we had told them you know what? We'll pay you $5,000 up front, and we're going to recoup that money. As soon as you generate revenue, I'll send you money.
Pablo:You paid them to become customers.
Andrew:We offered them. As soon as you offer, you know what? If it's still not enough, I'll pay you 5,000.
Pablo:Wow.
Andrew:After a couple of months, you will generate enough revenues. I'm going to recoup that money and pay you back. That actually made the switch. One of our first sales with NIGHTOUT was exactly – it was like, okay, you guys seems legit enough. You guys are ready to put your balls on the table. I'll fucking do it. Sorry about it, my French. I'll do it, and we're going to see whether it work out. In the end, it work out really good, and after this, obviously, it's much easier to sign a second partners and a third one because you're already in bed. You already test out what are the pain points during the process, so you get better.
Pablo:I hadn't heard of that. It makes sense. I mean, it just shows how much you believe in it. What was the outcome? When they put this in, what kind of ROI did they see? Do you remember? They actually sold quantitative – more tickets, or maybe what did you do to be able to measure that ROI because that's what then helps you sell to other customers?
Andrew:Yeah. For us, it was all about conversion rate. What was your previous conversion rate before? What is a new conversion rate? Are we helping you out, sell more ticket, or actually, are you losing on tickets? Some of them were really stressed out. They're like you're going to purchase two tickets for Justin Bieber back in the days. That's $500. Then you will have to add another $400, $400 for a night at the hotel. Maybe the card’s value will be too high, and people are going to drop off. If it's not the case, they're going to just remove it from there. Good thing for us, actually, the opposite happened, so people were actually booking more tickets with this because now they were able to do just a full package. They're like, okay, cool. I book my tickets. The next thing I need to do after purchasing my experiences is book my accommodation. In our pitch deck, One of the things that we said to investor was the way that travel changed over time. Back in the days, your parents probably just book their flight, or their bus, or they took the car, and after this, once they were at destination, they were finding, okay, what are we going to do now? I dare you to find someone today that's going to book their flight tickets, and they’ll have the tickets for the Super Bowl, to go see the NBA, the NASCAR, whatever experiences you want. This is now the first step, so we managed to find ourself right after the transaction take place. Once your dopamine level gets high, you're super excited. You got your credit card in hand. You just got your tickets. You're like let's do this. I'm ready to spend money without tickets, and that's the reason why your conversion rate went higher because of it.
Pablo:Maybe just to drill down that, where did you – just to be sure, if I'm buying tickets to Justin Bieber, I can – I make that transaction and then you come up, or I click the tickets, but before I've actually put my credit card in and bought, you come up and say, hey, do you want to add the hotel experience or whatever?
Andrew:Both, so we do both. We do pre-transaction and post-transaction, so that's why we have an impact on both sides.
Pablo:In the early days, back then, you also supported both?
Andrew:Early days, I think we were only doing after the transaction take place, and after this, we started to do before, which was a big challenge because they were afraid. Once they saw the conversion rate go up, it was much easier to sell after this.
Pablo:When you did after, what was the value prop? At that point, you're not impacting the conversion rate, right?
Andrew:For after, it's mostly for revenue generation. They book. I'll be able to get more data. Maybe I can call back after this, [unclear], and say you know what? Last year we sent over 10,000 people to book in that specific area. You guys want to do a special deal, a promotion on those things? Data for it was really valuable for them. things. So data for was really valuable for
Pablo:Okay, cool. You land this first customer. You prove it out. How do you land the next two to five? Did you build out specific case studies, showcase how much you move the needle on conversion, or was it just all zero to one? They all happened at the same time.
Andrew:They happened at the same time. We did use some introduction by them, so if one customer was super satisfied with [unclear] out, he agreed actually to give strong recommendation to others. Are you guys good if I put you in touch? He’ll be able to tell you about the pain point, where we're solving the issues we had together, and it was actually your ambassador. It was selling a product for us to competitor of his, which was really great for him. Not everyone agreed to do something like that.point when we're solving the issues we had together. And it was actually your ambassador. So it was selling a product for us to competitor of this , which was really great for him. Not everyone agreed to do something like that.
Pablo:Why would they do so? They just liked you a lot?
Andrew:No clue. Maybe because as a French-Canadian vibe that we're just being friendly. The entrepreneur, one thing we figured out, the younger the company are, the more the CEO is an entrepreneur that founded the company in first place, the stronger the relationship is versus big platform back in the days think about the affinity of this world, Ticketmaster and so on. Obviously, it's not the founder that's the top of the company. We cannot reach to them. They're not as open, but founders want to help founders. That’s always been super helpful for us.
Pablo:When do you start feeling – like in that kind of V1 – because we're still talking pre-COVID days. When do you start feeling like, okay, you know what? We got it. This is really working. This is vibing. Revenue's going up. Things feel easier and easier versus harder and harder.
Andrew:Yeah, probably around 2019. We got a team of about 24 people. Back then, we got that hockey stick growth going, 4X year over year once more. We're killing it. We feel like nothing can stop us now. We're raising our next round of financing. We closed the paperwork in February 2020.
Pablo:No way.
Andrew:Bam!
Pablo:Wow.
Andrew:Yeah, pandemic hits.
Pablo:How much did you raise? What was that round?
Andrew:It was about two and a half million dollars at that point. Unfortunately for us or fortunately knowing what the story is now, the investors – some investors didn't send their money. They said, “You know what? We don't know what's going to be happen. We don't know how long that pandemic is going to last. We’re not toing to send the cash.” I'm like, “We got a paperwork signed, right? You need to do something about it.” He’s like, “You can sue us if you want to. You will probably run out of money before anything happens.”
Pablo:Wow .
Andrew:That's true .
Pablo:They had signed it . Oh, yeah. Just to be clear because this is really important, they signed – what was it? Was it a SAFE that they were doing, or was it like a price round?
Andrew:Price round. It was a price round with amount. They had 60 days.
Pablo:They had signed purchase agreements, all this sort of thing.
Andrew:Everything was signed up on February.
Pablo:Oh, my God. They had 90 days to send the money. Wow.
Andrew:The first investors send their money within 30 days, so pre-pandemic, everything was good. Once the pandemic hit, we had another investor that sent their money, but couple of investors in the end are like seems too risky for us. We're going to wait and dodge.
Pablo:Goodness.
Andrew:For myself, even if I didn't want to get those people on my board, I'm like you know what? If you don't believe we'll be able to get through this, screw you. We'll make it without. Because my other investor could have just decided to pick a fight with me and say you know what; you didn't follow your [unclear] and decided to go for the money, I actually had to start a legal system against them. We had to openly sue them and say you know what? You need to send their money and so on. They never send their cash. We just opened up the [unclear] case and decided to move on after this.
Pablo:Goodness.
Andrew:You know what? Couple of years later, we decided to ring on the door and say, “Hey, where are we supposed to send the money again?” Yeah, sure, forget about that.
Pablo:Did they really come back?
Andrew:Yeah, they got some balls, huh?
Pablo:Oh, that’s gutless. Wow!
Andrew:It is a crazy world, and every single entrepreneur of mine told me the same story. Don't celebrate until the money at the bank, but I tell you, we did pop some bottles as soon as the paperwork signed in February. It was like, oh, wow, that's going to be so hard to tell the team. We had to cut people off because the money never came in, so we had to make some massive decision during the pandemic because of it.
Pablo:It's a once in lifetime thing, but it is reflective of something bigger, which is you're never safe. You know what I mean? This is just the life that that founders choose is just the highest of highs, the lowest of lows, and you're just one thing away from something huge happening and one thing away from something terrible happening.
Andrew:Even with the money, Pablo, I could have gotten the two and a half million dollars and said you know what? Let's keep going. My investor and board could have just come back and said you know what? We don't think you got what it takes. Forget about it. Send the money back to the . It could have been a legit decision, right? They want to protect themselves. It could have been the right thing. Though, we were really lucky with our investor that did send their money. They were like you know what? Just don't burn too much. We don't how long it's going to last. We trust you. Do whatever it takes to get stronger out of this. They have a strong mentality that in every crisis there's an opportunity, and they believe that me and Hamed were able to figure out whatever opportunity we were able to size for the company. That's what happened.
Pablo:Now, let's get real, though. When that happened, so you have maybe a significant portion of your round that doesn't come through. I think, much more importantly, your revenues just crater because who's doing events in March 2020, April 2020? We'll get into what you did because you solved the problem. What are you feeling, and what kind of conversations are you having with your co-founder at that point? Was there despair, or did you never even get there?
Andrew:It was mostly a rollercoaster, and most people think that either you get down right away or later. What happened for me, so the review went down from $130,000 US a month to 10,000. It's not enough. We don’t know how long we're going to last. We have to make massive cuts for the business. I think, during the first week, week and a half, we're also in daily meetings with the team. We’re like we’re going to get through this. Don't worry about it. We have plans. We'll find a new solution. We're running brainstorm with a team, workshop with other entrepreneur. We're doing some of working session about where can we use our product in different industry? Now we can do all of that crap, and after two weeks, I think, this is where it really hit us. I'm like, okay, it's not going to come back anytime soon. Event industry is completely dead. All of our customers had no more money, so we will not be able to sell them anything else. There's no way the pandemic is going to last for six months, so we started – it was like it might last for – I don't know, and people were like, oh, 6 months max and 12.
Pablo:Oh, yeah, people were like six weeks, yeah, then six months...
Andrew:Exactly.
Pablo:...two years. It changed all the time.
Andrew:After two weeks, we're seeing what's happening in China, and China was the first one in. We're like, okay, everything is still shut down now. The odds of this getting back up is going to be good, and this is probably where I hit the rock bottom. I was super tired. I was depressing. I was drinking during the day. I was not feeling well at all, and I wanted to just get out. I'm like am I going to lose my time trying to survive with that business where we don't even know for how long? I think my time is more valuable than this, but at the same time, we had a great team of people so we inquire. We look at different opportunities. I was so depressed that we call a couple of competitors of ours in different industry. Are you guys interested in doing acquire? We don't care for anything for us. Just make sure that their employees ESOP will be transferred. We look at everything. We're like we might not be the right people to lead the ship.
Pablo:Did you think about maybe just giving the money back too? Was that an option or no because it would've affected your employees?
Andrew:We never really thought about giving them money back, to be honest. It was such a small amount for the big investor. We had around the table. For them, it was not going to make any change versus, oh, if there's a way actually you can use that cash to get bigger and find opportunities, that's going to be such an upside for you.
Pablo:You’re going through these conversations and just none of them materialized, or did you decide, actually, we don't want to do this, or just – literally, it’s just nobody would buy you guys so you got forced to push?
Andrew:I know we actually went through a couple of conversation with this. Most of the time, it was coming back to can my employees get whatever good salary, which was not good salary back in the day? That was a checkmark all the time because every company out there can fit better than we could. The stocks, so they were not able to transfer the stocks, and we wanted for employees, my colleague, to get something out of the journey. They might have been with us up to three years at that point. We’re like let's get in, make sure they haven't got paid $20,000 for nothing during that time. They must have something in return, and we were not able to use just because, obviously, we had no leverage. We were burning the money every day. Every month we were going down. We knew for a fact we had a goalpost that was going to kill us in a couple of months, so it was super hard.
Pablo:What did runway drop to at that point?
Andrew:Without the government, we were at about six month of runway.
Pablo:Wow.
Andrew:We were going down pretty fast. Good thing that we just raised before, so it was good. With the government stepping in and paying 75% of the salaries in the rent, we were able to extend it up to about 18 months, which was exactly what we needed.
Pablo:When do you start to shift from, oh, my God, on fire, let's just try and get out as quickly as possible as long as it meets certain conditions to let's find an opportunity?
Andrew:The opportunity was always there. I was probably not the one leading it all the time, but about two months, two months and a half later, after running all of those scenarios and brainstorm, nothing is really working out. Nothing is sticking up. We don't feel so good about ourselves, so we're looking at the different scenarios.
Pablo:Just so I know, how many people are you at this point?
Andrew:We’re 42 as of today.
Pablo:No, I mean, in the story at that point.
Andrew:Oh, sorry, we're probably around a dozen people back then so 8 to 12 people.
Pablo:Dozen people brainstorming. No one's doing any work-work. They're thinking, but there's no production because there's nothing to work against and two months of that, all right.
Andrew:Exactly. You don't know what to do with your day, right?
Pablo:Exactly.
Andrew:What are you supposed to do? You don't reach out to customer. You don't spend time, so people just sat at home doing whatever they can. Obviously, they all have their family as well. They all have their own problem. You're not able to go grocery shopping. You're not able to go out. Your mental issue is not as good, so everyone's having the same type of challenge. We're just trying to do those daily and weekly call about, hey guys, here's what happening in the market. Here is the data we're looking into. We think it's going to go back in X amount of time, but we barely know what's going on. We’re trying to make our best to keep the positive attitude, even though we know it might never come back, and we'll just have to deal and shut it down.
Pablo:No one did. I mean, that's the crazy thing about then is nobody did. There was nowhere to point to that you could say they know. It just was complete…
Andrew:It was bad. A year exactly after this, so March 2021, we lost our biggest supplier, which was Airbnb. Airbnb decided to drop [unclear] platform. They wanted to go public so go with, yes, one, show that 95% of people go direct to Airbnb, so they shut down everyone. Airbnb was representing about 72% of our reviews back then.
Pablo:Wow.
Andrew:That was another big drop, so we're starting to slowly get back. Pow! Now you got to find another way in.
Pablo:You're getting back just…
Andrew:All of my investors…
Pablo:Just through that time, you're getting back on still the same model selling to ticketing platforms, or did you start making a shift at that point?
Andrew:At that time, what we noticed is nothing's happening with the event industry. Let's move out of this. We came back to the conclusion of like where do people travel right now? They're not able to go outside of the country. What they're going to do? Go back and export their cities, which was the main thing people did. I don't know if you did look at the nicest beaches 90 minutes away from where you live. Go back and see whatever, museum and outdoor activities. This is what most people…
Pablo:Cottages, that's what we started doing, yeah, 100%.
Andrew:Exactly, cottage and you go hiking. Over there is a nice trailing. All those massive outdooring company just lift up during the pandemic, and this is how we decided to switch. We're like, okay, good. Now we have an idea. How do we get to those people? I'm always the go-to market. How do we find a distribution to get them? The one talking about this were either content creator, bloggers, or media company. Both of them were the one driving that type of travel, so we decided to talk with those people and say, okay, it's a bit different than what we're doing with ticketing platform. The map-based solution doesn't work as good for you guys, but we can find a way to get it.
Pablo:Just to get more clarity on that, this is what? This is somebody that writes top 10 beaches in Ontario, this kind of thing?
Andrew:Exactly, you got it. Those are moms and pop shop. This is going to be Caroline, 45 years old, that live in Missouri that's going to talk about here's a nice thing to do around the city. If you got kids, the 10 nicest activities around. This is exactly your type of crowd that we’re dealing with.
Pablo:Okay. The media companies would be what?
Andrew:In Montreal, it would be our city. They’re the one talking about mostly for Gen Z. Gen Z calling the nice shots. What's happening with the vibe? What's going up in the trend right now?
Pablo:Let’s say it’s like a BuzzFeed but local BuzzFeeds, things like that….
Andrew:You got it.
Pablo:...that are writing these kinds of lists.
Andrew:Yeah, something called BuzzFeed. Reach out to those people, try to understand what the pain point is. At that point, me and my co-founder decide to get back on the steering wheel because we had some people working with us were like it's not fast enough. We want to be at the leading edge of this. People don't trust, let's be honest, us anymore because we've been hyping the situation for a year and a half at that point. Hey, don't worry, guys. It's going to work out. It's going to work out. Nobody believe us probably at this point.There's a demo like this is scrap , this is scrap , this is scrap . But that's there . It's kind of cool. So let's like explore this a bit further. And we did this for about 10 days just.
Pablo:Crazy.
Andrew:It’s like, okay, let's get back to this. During the day, I was running interview with bloggers, so I was running 5 to 10 people doing workshop, calling them out, seeing what their pain point was, just trying to understand. My co-founder at night was coding the product that we're describing for a full week, and the next day, I was having another conversation with different blogger like, oh, where's – we work on. There's a demo. This is crap. This is crap. This is crap. It's kind of cool, so let's explore this a bit further. We did this for about 10 days.
Pablo:Just to make sure the timeline right, February 2020, that's the round. March, April, you start trying to see if you can exit of 2020. This is a year later?
Andrew:Yeah, a year later.
Pablo:It's March 2021, after Airbnb shuts you down.
Andrew:Almost at the same time as Airbnb shut us down. Maybe two months before Airbnb shut us down.
Pablo:You crossed your fingers and hoped for about a year, basically, trying to say, okay, this is going to come back. It's going to come back. It’s going to come back.
Andrew:Be as frugal as possible, renegotiating all of our deals, negotiating the rent, negotiating all of our contract, not paying our provider, dealing everything we could just to keep as much money as we could to delay whatever amount of time we needed to get there. It was about to come back.
Pablo:That's when you realized, okay, what's the new normal? What are people actually doing? Then you started going down this blogger media.
Andrew:Exactly. Nothing was really happening during the first six months, right? You were stuck at home. You were not able to go outside. You couldn't even hike. You’re going to have to wait in your car past 8:00 p.m. in Montreal. Everything was shut down, but after about six months, people started to go a bit more. This is how we managed to get into the outdoor industry.
Pablo:What did you find out from these conversations with bloggers? What were some of the main pain points around what you were maybe offering?
Andrew:A couple of stuff, most of them use hyperlink, and one of the biggest pain point they had is they had to manually change those things by themself. Whenever there was a 404 error, one of the Airbnb or Vrbo was not available anymore, they had to go change manually all of those links. Sometime they had hundred if it was not thousands of link, so okay, we're going to use the Stay22 one. We'll be able to change those 404s. It's going to work great. Okay, cool, that's about 20 hours of work. I will do this in Q5. I'm like, nah, that's not going to work out. We're going to make company culture. Give us access to your platform. We'll make it for you. Screw you. There's no way I'll give you access to my bread and butter.
Pablo:These were affiliate links. They would write 10 beaches in Ontario. Here's where you should stay. Here's a link to an Airbnb, to a hotel, whatever, and they'd make some…
Andrew:Yeah, you got it or nicest treehouse and so on, and we're just making money out of this.
Pablo:Got it, okay.
Andrew:They were having most of that problem. After about a week of work, my co-founder is like, cool, we're asking for all of those stuff, but this is not what I would actually need. I'm like, cool, thank you so much. Like a Ford, just like they’re asking for horse and the fastest horse and you came with a car. I'm like, “What are you thinking?” He's like, “We're going to create a script that's going to replace all of their link for himself.” “Okay, keep going.” He’s like, “They're going to embed this on their webpage, and we will take control of everything on their webpage.” “Eh, I’m not sure they’re going to trust us, but keep going.” We will replace all of the link for themselves. They don't have no work to do. They don't have to worry anything at all. It will take five minutes of the creation, and we’ll be able to generate more revenues for them. They'll have all of their script in one single page. In one dashboard, they'll be able to have all of their providers in one place, and this is exactly where we pitched to the market the following morning. Most of them hated the idea. They're like we're still not giving you access to a platform. Some of them say you know what? I'll give it a shot. We'll give you access. Show me how it work. Those first two customer were the one that we used for the beta, and after about two weeks of working with them, they fall in love with the situation. They just love how easy it was, and from there, we were able to just expand and get more notoriety because they were the one that we built the case studies on. We're able to use their word of mouth, use them as reference, and from there, this is how we managed to get our second hockey stick growth coming out of the pandemic.
Pablo:Tell me a bit more about how that works. Now you would write a blog, 10 beaches in Ontario. You would plug your solution in. You would find the stays for them, or they would still tell you which ones and you would switch the link?
Andrew:We do a bit of both. Right now, if they're writing – if there's a previous blog about 10 beaches in Ontario, we're going to just look at all of their previous links, see which one is broken and which one redirect where, and we're going to take over those links for themself and show to whoever best provider we think will convert or bring more reviews. If they don't have any type of content already, they don't want to waste their time to look at the nicest one, we take care of it. We have hyperlink solution right now with ChatGPT and Gemini. We’ll be able to read the information from the page and just add hyperlink on top of it for whatever we found, so they have actually nothing to do else. They can finally focus on their work, which is writing down about where they like to travel, and we take care of the manipulation for themself.
Pablo:That makes a lot of sense. By the way, what happened with Airbnb? Were you not able to link out to Airbnb in these blogs?
Andrew:We can still link out. We're just not able to monetize it as much.
Pablo:Oh, okay.
Andrew:It's impossible for us to provide value as much for a provider.
Pablo:Does that mean you try and favor others like Vrbo and booking and for the blogger as well?
Andrew:Exactly. Whoever is going to pay more, just an extent, we’ll be able to get more traffic because of this. It just a lot of supply and demand.
Pablo:You finally get this out with a few beta customers. We’re, I don't know, mid-2021. When do you feel like this really starts working and, again, this starts taking its own kind of momentum?
Andrew:Not so long. Probably about three months. At first, most of the people in the company were making fun of it. They called it Monopoly money. We used to get paid so much faster in the event industry. People were booking 30 days in advance. They were booking their travel at the same time, so it was super-fast. Now, with the travel community, people are booking months ahead, like 90, 120 days. We're getting paid 60 days after this, so it takes so much more time. Maybe we'll see money at one point, but maybe we'll never see it as well. Plus, cancellation rate is higher. It was a total different industry for us. The team was like, eh, maybe it's going to work, but probably just a waste of time. Let's keep working back on the event that we're slowly starting to pick back up, and in the end, we decided to stay on it, focus on exactly what we were good at. When we're talking with customer, it was solving a real pain for them. We had no churn. In a couple of months, we managed to get from 5 partners, to 10 partners, to 50 partners, to 100 of partners, and to this day, we almost have about 2,000 partners using those product. It’s really like a hockey stick growth.
Pablo:How quickly did you grow, let's say, from zero to a million? Do you remember what that path was like?
Andrew:Good question. We moved back from, let's say, 2020 was zero back in the days. After this, we managed to do $5 million. Yeah, we lost money in 2021 again. In 2022, we did manage to drive about $5 million in sales.
Pablo:Wow.
Andrew:2023, 15 so about 3X, and 2024, we're hoping to go about another 2X out of that so almost $30 million.
Pablo:Oh, that's incredible. Did you move back? What about the events? I'm thinking, the Justin Bieber concerts, I mean, they're whatever. Taylor Swift, they’re all back now. Are you serving that market again too?
Andrew:Still serving the market. They represent about 15% of revenues to these days. Just to give you a good understanding, if we had kept in our previous market, we were doing about 15% of revenues we're doing today. It’s still growing. Just a matter of tiny fraction versus a new market that we just expand with bloggers.
Pablo:Awesome, man. Now you're doing about $2 million in revenue a month after to 10K in revenue a month.
Andrew:Pretty good. No?
Pablo:It’s pretty incredible, yes.
Andrew:Feels much better.
Pablo:Much, much better. Listen, Andrew, we'll stop it there. I'll ask you the two questions that we always end on. The first one is and especially on this kind of V2 play with bloggers and media, when did you know that you had true product market fit?
Andrew:We always had a feeling, but to know it, I think it's when we talk with the customer. Before, talking with someone, that you can feel it in their eyes so you get what I'm talking about. You get the point. This is exactly where we felt it, and we felt that twice, first with the event industry when we first started and after this with the blogger segment that we are currently working with.
Pablo:Okay. Then the last question is – normally, it's actually what's the number one piece of advice you would give yourself? Let me reframe it like this. Because you've gone through these oh shit moments where it really looks like the end is right there, what advice would you give to yourself or other founders that are facing similar existential moments in their business?
Andrew:Oh, man, that's a hard one. It's a fine line between getting crazy and resilient. It’s a fine, fine line, and it's a matter of looking at what the market is. Is it a big enough market? Do you have a big enough opportunity? Do you have something that others don't have in terms of data, experiences, skills, network, whatever you want coming out of this? If you believe you have an edge somewhere, you should stay for it. Keep working and pushing and pushing and pushing because you got something that nobody else got, and it's always about timing, as you know, and so on. You got to fight for it. If it's not the case, might as well move on to another project. Your time is the most finite resource. You got to take care of it. You got to empower it as well, so I think it's much more important for you to care and spend your time where you want on something that's going to be driving innovation, that's going to be passionate, that's going to be drive passion for you. That will be my strongest recommendation.
Pablo:If you listened to this episode and the show and you like it, I have a huge favor to ask for you. It’s actually a really small favor, but it has huge impact. Whichever app you're listening to this episode on, take It out, go to a Product Market Fit Show, and leave a review, please. It's going to help. It's not just going to help me, to be clear. It’s going to help other founders discover this show. The algorithms, whether it's Spotify, whether it's Apple, whether it's any other podcast player, one of the big things they look at is frequency of reviews. It's quantity of reviews, and the reality is, if all of you listening right now left reviews, we would have thousands of reviews. Please, take literally a minute, even if you're just writing great podcast, or I love this podcast. Whatever it is, just write a few words. Obviously, the longer the better, the more detailed the better, but write anything, leave five stars. You will be helping me but, most importantly, many other founders just like you discover the show. Thank you.
